Struggling to keep its operational ratio under 90%, the railways wants the new government to clear its proposal to increase passenger and freight fares by 14% and 6.5%.
Out of the national transporter's gross traffic revenue, about 65% is from freight and the rest from passenger revenue and other sundry earnings.
Unless the fare hikes being mooted by the railway board is cleared by the Modi government, the railway will have to cut down on its revenue projection for the current fiscal by a whopping Rs 10,000 crore from Rs 1.5 lakh crore gross traffic revenue projected in the interim budget, sources said. This could upset its plan to reduce the operating ratio to 88% from 90.4% last fiscal.
“The decision has to be taken immediately and we can't afford to wait till the rail budget in July. The new government has to bite this bullet if they are serious about improving railways financial health,” a senior railway board official said.
“We wanted to increase the fares in April but the outgoing government has been wary of this unpopular decision and then model code of conduct was implemented. So, if we don't do it now our revenue earnings projections, which were made by keeping in mind the fare hike, would go haywire,” the official added. .
According to railways plan, a flat 10% hike in passenger fare could be announced for all classes, an additional 4.% increase under fuel adjustment component (FAC)-linked revision scheme will be effected on passenger fares, taking the total hike to up to 14%.
Railways will also increase the freight rates with a 5% hike and an additional increase of 1.4% on account of FAC.
The FAC was introduced by the railways about a year back for automatic revision of passenger fares and freight rates corresponding with the revision in fuel price.